From the Marines and Merrill Lynch to Marijuana Startup CEO

As I've written about previously here and here, opportunities abound in the budding legal weed business. And these aren't just for growers, trimmers, and budtenders, but also for CPAs, lawyers, bankers, and marketing and advertising executives. Today, these positions can be found across the country. To date, 23 states and the District of Columbia have legalized marijuana for medical purposes, and four states (Colorado, Oregon, Alaska, and Washington) and D.C. have legalized pot for recreational use. In fact, last year, in Colorado, perhaps the leading legal weed state, recreational and medical marijuana accounted for $1 billion in revenues.

Though booming, the industry faces a few major problems, one of which is the fact that marijuana is a Schedule 1 drug according to the U.S. government, putting it on par with heroin and LSD, meaning banks and credit card companies, regulated by the federal government, have stayed away. The thinking goes: since weed is illegal to sell at the federal level, if a bank were to take money from a weed operation, even if that operation is located in a state were weed is legal, said bank could be guilty of money laundering. And so, according to the New York Times in a recent article entitled "The First Bank of Bud":

Without a bank account, pot businesses deal in cash, lots of it, held in safes, handed out in clipped bundles on payday, carried in brown paper bags and cardboard boxes to the tax office and the utility company, ferried around the state by armored vehicles and armed guards. And without access to essential banking services — from credit cards to electronic transfers to loans — those businesses pay a huge premium. The reality in Colorado is that it is legal to grow pot but extremely hard to grow a pot business.

Which is where Tokken comes in. Tokken (yes, pronounced tokin') was started by Lamine Zarrad, an ex-Merrill Lynch broker, former Marine, and, most recently, ex-federal bank examiner with the Office of the Comptroller of the Currency, a division of the U.S. Treasury Department.

Mr. Zarrad’s start-up, Tokken, is ... aiming to offer something new — an electronic payment system that will not rely on the credit card companies or debit networks. Somewhat like PayPal or Venmo, Tokken will use the electronic money transfer system in the United States known as the Automated Clearinghouse, or ACH, to move money from the bank account of a dispensary customer to Tokken’s bank account. Tokken will then keep subaccounts for each dispensary — making it unnecessary for the banks to deal directly with dispensaries.

Incidentally, Zarrad started Tokken while he was still working for the federal government.

Mr. Zarrad began working on Tokken in his free time, and found a programming partner, Tom Rau, who lives in North Carolina. The system they have built will allow customers to make purchases with a Tokken app on their smartphone, taking cash out of the equation.

However, Zarrad didn't start tokin' until he left his job with the Feds.

Now that he is off the federal payroll, he will also be able to enjoy the products peddled by the dispensaries, especially the edible marijuana products. “I lean toward edibles — I just don’t like smoking,” he said.

In any case, Zarrad's is not the only U.S. company vying to become a sort of PayPal for pot. In Washington, PayQwick "enables legal marijuana commerce." And, of course, there are many other marijuana startups looking to take various pieces of the $50 billion national legal weed market. Here are 23 in San Francisco alone.

Featured Companies

X

Comments Policy

Vault.com encourages you to express your opinions and engage in discussions with one another by leaving comments on our site. While we promote an open forum, please follow these guidelines to ensure an enjoyable and welcoming environment for all our readers. Vault.com does not review or moderate all comments but we reserve the right to remove or edit content once posted.

Respect one another. Debates are great, but attacks are not. Please refrain from posting offensive, obscene, threatening or abusive comments. If you personally attack other readers or writers, your comment(s) and responses to those comments may be removed from the discussion. Attacks create a hostile environment that discourages discussion. You are fully responsible for libelous or defamatory comments.

Hate-speech will not be tolerated. Comments containing racism, homophobia, sexism, or any other form of hate-speech have no place on our site.

Keep your language in check. Vulgar posts may offend other readers. Our filters are fairly tolerant, allowing for quite a bit of colorful/questionable language, but too many obscenities may prevent a comment from posting. In addition, in some cases, if a post is still too vulgar, a moderator may later remove or edit it.

Please note that comments may be edited by the moderator for any reason, including but not limited to language.

Stay on topic. Comments should be related to the topic discussed in the associated article or blog post. In order to keep the conversation relevant, off-topic comments may be edited or removed.

Don't impersonate someone else. You may not use a false e-mail address, impersonate any person or entity, or otherwise mislead as to the origin of your comments. If we believe you've impersonated someone else, we reserve the right to remove the comment.

Spam and commercial content will be removed. We do not welcome comments containing copy used for commercial purposes or for soliciting funds. If we see them, we reserve the right to remove them.

Readers may "report" concerns about other reader comments. Please use the "Report Abuse" link to flag inappropriate content. If a reader reports a concern, moderators will try to review that concern as soon as possible. This may take a few days although we hope to review comments more quickly. We do not remove every comment that has been reported and we cannot respond individually to every report.

Stop and think before you comment. We won't remove comments because a reader or writer regrets a post. Please remember that these comments are searchable and a comment history has a long life on the web.

Don't include personal information in your comments. We strongly discourage readers from posting personal information about themselves (ex. address, telephone number, workplace) and reserve the right to remove any comments we find with personal information about other people or that violates a third party's right to privacy.

Complaints about removed comments. We reserve the right to remove comments left to protest a removed comment. Please contact us if you have any complaints about deleted comments.

Repeated abuse of our guidelines may lead to commenting privileges being suspended. If you think you've been banned by mistake, let us know.

For further questions and comments regarding commenting on Vault.com, please contact us.

Get tips on interviewing, networking, resumes, and more directly to your inbox.